are TERI private loans dischargeable?

[justbroke]

Prouty settled with TERI for $12,000. However, I don't know how much in legal fees the debtor incurred trying to pursue this so it cost the debtor more than $12,000. The Debtor was allowed to pay $100/month until the settlement was paid. There was no interest. If the debtor missed one payment, the balance of the $12K was accelerated and the remaining balance was due.

You have to realize that this case was settled just on pure "attrition". The case was just shy of 2 years old!

[HHM]

P.S. Not easy to find a lawyer who knows about these things.

LOL, actually, the real issue, is finding a lawyer that knows about it, that you can afford. That is where the real rubber hits the road.

If you found a lawyer that knew about the issues, and wanted $10K, paid up front before even starting, would you [could you] even do it

[student2011]

§ 523(a)(8) was the nail in the coffin and "unless
Defendants fail to prove that the debt is for “an educational . . . loan . . . made under any program
funded in whole or in part by a . . . nonprofit institution,” or Debtor establishes undue hardship."


"Prouty settled with TERI for $12,000." This is much better than $180,887.55.


If they pass these Acts: S.B. 1102: Fairness for Struggling Students Act of 2011
and H.R. 2028: Private Student Loan Bankruptcy Fairness Act of 2011,
what will happen to § 523(a)(8)?

[GIn]

You have to realize that this case was settled just on pure "attrition". The case was just shy of 2 years old!

So, if a person is going to be filing BK soon, has a TERI loan that is more than ten years old, haven't paid them in ten years and way past the statute of limitations on a breach of contract claim, would it be advisable to 1) stir the pot with an adversary proceeding in the hopes that they don't respond and in the worst case, agree to a settlement if they do respond, or 2) don't file an AP in BK, continue after BK not paying and try to get any post-BK suits by TERI dismissed under the statute of limitations defense?

[justbroke]

So, if a person is going to be filing BK soon, has a TERI loan that is more than ten years old, haven't paid them in ten years and way past the statute of limitations on a breach of contract claim, would it be advisable to 1) stir the pot with an adversary proceeding in the hopes that they don't respond and in the worst case, agree to a settlement if they do respond, or 2) don't file an AP in BK, continue after BK not paying and try to get any post-BK suits by TERI dismissed under the statute of limitations defense?

1. TERI will respond.
2. Filing in State court is just about as good as the BK court. (By this I mean that the State court issue may be easier on a Statute of Limitation (SOL) affirmative defense, versus a dischargeability complaint on an SOL offensive strategy.)

My real wonder is why haven't they gone after a judgment for these loans? You say that it's ten year old, but when did the repayment period start, when was the last payment (month/year), and whether they've taken any other action(s) to collect.

Also, I do not understand how you reached the conclusion that 11 USC 523(a)(8), "was the nail in the coffin". The final judgment did not have anything to do with that... since there was no ruling. It was a settlement. Prouty basically agreed to entry of an order in favor of the Defendant, TERI. Prouty basically allowed an entry of a judgment in TERI's favor, conceding the facts in exchange for a settlement offer of $12,000 (about 10% of the total).

I would not hold my breath for Congress to do ANYTHING in the next 12 months. They haven't even dealt with modifications of mortgages in a Chapter 13. They are too busy with the budget these days. Besides, most laws in this area are not retroactive. They usually apply to something that occurred "after" the date the law is enacted.

[HHM]

I am with JustBroke on this one, the burden is still on the debtor, ultimately, to prove the debt is dischaged.

[GIn]

Just to clarify - you are suggesting that it would be better to not file the AP in BK and instead wait and see what TERI does after BK, because it may be easier to get the suit dismissed for SOL in a regular state court?

JustBroke: The debt is over fifteen years old. I haven't made a payment in over ten years. I don't know why they didn't file suit earlier. I received a threatening letter from a local attorney last year. But the SOL has passed since then.

[KeithDoxen]

JJustBroke: The debt is over fifteen years old. I haven't made a payment in over ten years. I don't know why they didn't file suit earlier. I received a threatening letter from a local attorney last year. But the SOL has passed since then.

I feel like there's this mythology out there that student loan companies operate like well oiled machines when it comes to defaulted loans, and that they are watching the clock like a hawk to make sure that they file suit against debtors who default the day before the SOL expires on private loans.

I don't think that's true at all. I read accounts all the time about people being sued for student loan debt 5-10 years after default. I think student loan companies are extremely overwhelmed by all of these defaults, which used to be a rarity given that it was once the case that college graduates would be likely candidates for gainful employment. I think, and this is just a hunch, that the level of defaults that student loan companies are experiencing are taking these companies by surprise and that a lot of defaulted loans are slipping through the cracks.

[HHM]

Just to clarify - you are suggesting that it would be better to not file the AP in BK and instead wait and see what TERI does after BK, because it may be easier to get the suit dismissed for SOL in a regular state court?

I don't think anyone is suggesting that, in fact, we are all saying the opposite. What YOU need to do is file the AP.

[justbroke]

My personal belief is that it's less expensive to fight them on an SOL defense in a State-court action, rather than on the offensive in an Adversary Proceeding (AP) in the Bankruptcy court. However, that's just me. In any event, venue is important and if you can find more sympathy in the Bankruptcy court, then challenge in the Bankruptcy court.

As to whether these companies are on the ball with respect to SOL issues, remember that the SOL may be tolled depending upon the State where the debt existed and where you live! Tolling could be the nail in the coffin for the debtor.

[KeithDoxen]

As to whether these companies are on the ball with respect to SOL issues, remember that the SOL may be tolled depending upon the State where the debt existed and where you live! Tolling could be the nail in the coffin for the debtor.

The most probable way that tolling could come into play is if the debtor lived in State A when the default took place, moved away from State A, and then moved back to State A. The time spent away from State A would not count towards the SOL in that case. Simply moving states does not doom the debtor via tolling however. Moving states tolls the SOL in the state where the cause of action accrued, but not in the new state of residence of the debtor. If the debtor has moved from State A to State B, he will be sued in his current state of residence, which will apply its own SOL or look to its borrowing statute to determine which SOL to apply.

[justbroke]

Let me also clarify my position on fighting this. I would fight it in both venues. If you are already filing (or filed) for bankruptcy, you might start a adversary proceeding (AP) to go on the offensive. If you have no luck and the only issue in the BK court was dischargeability, then I might then return to State court to defend the lawsuit with the affirmative defense of an SOL issue. Again, venue can be important. I can't select the venue for someone.

[GIn]

If you are already filing (or filed) for bankruptcy, you might start a adversary proceeding (AP) to go on the offensive.

I don't know on what grounds I would use in the BK AP. I can't prove undue hardship, so all that is left is whether TERI can prove that the debt is for “an educational . . . loan . . . made under any program funded in whole or in part by a . . . nonprofit institution.” I don't want to waste money on an AP that I have no chance of winning.

[justbroke]

I don't know on what grounds I would use in the BK AP. I can't prove undue hardship, so all that is left is whether TERI can prove that the debt is for “an educational . . . loan . . . made under any program funded in whole or in part by a . . . nonprofit institution.” I don't want to waste money on an AP that I have no chance of winning.

You could use the SOL in the "dischargeability" complaint. It's a reason to make it dischargeable. The problem would be, however, that if you lost in the Bankruptcy court, you may have issues with res judicata and collateral estoppel should you try to use SOL as a defense in a subsequent State-court action.

[souprebel]

"Private Student Loans have a SOL of 4 yrs from date of last payment here in PA and also must come off your Credit Report after 7 yrs of Date of last activity. Wells-Fargo took me to court for 2 private Student loans that I had not made a payment on since 6-2001 that I owed them a total of over $24,000 on. In court I brought up the SOL defense and the judge asked the attorney for wells Fargo the date of last payment I had made on these accounts, Well guess what, He didn't have it..... But I did. Judge ruled in my favor Debts out of SOL.......I owed them nothing.

So the lesson here is...Keep all your paperwork, Don't believe anyone that's tells you Private Student Loans don't have a SOL because they do. I'm living proof of that ( the sol would depend on what state you signed the loan papers in, most states are 4 yrs ) and if after the sol has expired and your are sued make sure you show up at the hearing to contest the suite and if it's out of sol the judge has to rule in your favor, that's the law. It saved me over $24,000 I had no attorney... just myself...and all I said was these 2 loans are out of the SOL of 4yrs here in PA, your honor.

I had a lot of people tell me that there was no SOL on Private Student Loans, Wells Fargo, Attorneys, People on the internet but the judge here in Central PA told me there was and he was the only one that mattered. That was over a year ago..... have not heard from wells Fargo since.... would love to....they would be in defiance of a court order and these 2 loans are no longer listed on any of my credit reports either."

Congrats!!!!!

I have 5 Private Sallie Mae loans and I can't find the SOL in Virginia. I have Googled all over. Is there a link?
Need to know the SOL on these. Does it go by the date the loan was opened or from the date of last payment?

Thank you!